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A former executive at a blank-check acquisition company planning to take Donald Trump’s social media company public is suing to block the deal until he gets a larger payment, according to a lawsuit filed Thursday in Delaware.
ARC Global Investments II, controlled by Patrick Orlando, said the number of shares Digital World Acquisition Corp. should receive once it merges with former President Trump Media & Technology Group Corp. has been shortened.
It asked the Delaware Chancery Court to expedite the case to resolve equity issues before DWAC shareholders vote to approve the deal on March 22.
DWAC shares were down about 9% in afternoon trading to $41.16
Orlando, as well as DWAC and the Trump Organization’s legal teams, did not immediately respond to requests for comment.
ARC’s lawsuit comes after DWAC warned Orlando earlier this month that the deal could be delayed.
Trump’s media companies and DWAC sued ARC and Orlando in Sarasota, Florida, on Tuesday, accusing him of trying to block a merger expected to close next month and “obtain a windfall through extortion.”
At issue is the rate at which ARC’s Class B DWAC shares are converted into Class A shares at the closing of the merger. Orlando-based ARC said each Class B share should receive 1.78 Class A shares. DWAC said the ratio was 1.34. The company said in a regulatory filing that the difference between the two ratios was more than 2.5 million shares.
DWAC asked the Florida court to declare 1.34 as the correct ratio for converting ARC stock.
Earlier this month, the U.S. Securities and Exchange Commission approved the merger of Trump’s company, which operates the “Truth Social” messaging platform.
The combined company could be worth $10 billion, and the former president’s stake could be worth billions.
The deal comes as Trump faces two separate judgments in New York seeking more than $500 million in damages. His lawyer said Wednesday that he would not be able to pay the full $454 million bail required in the civil fraud case.
DWAC signed a merger agreement with Trump’s company in October 2021 and has since been the target of an investigation by the Department of Justice and reached an $18 million settlement with the SEC for inaccurate information disclosures.
Since signing the merger agreement, the company has fired Orlando and restructured its board of directors.
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